GlobeNewswire Inc | Aug 20, 2020 09:05AM EDT

August 20, 2020

Record second quarter sales of $4,666,000 compared to $3,054,000 for second quarter 2019, representing a 53% increase and highest quarterly sales in Companys history

R&D activities focused on the development of innovative delivery systems

Net profit of $1,077,000 for Q2 2020 vs. net loss of $559,000 for Q2 2019

Cash generated from operations of $2,727,000 in 2020 vs $853,000 in 2019

Maintained production operations during COVID-19 pandemic, providing our customers with essential products while ensuring the health and safety of our employees

EDMONTON, Alberta, Aug. 20, 2020 (GLOBE NEWSWIRE) -- Ceapro Inc.(TSX-V: CZO; OTCQX: CRPOF) (Ceapro or the Company), a growth-stage biotechnology company focused on the development and commercialization of active ingredients for healthcare and cosmetic industries, today announced financial results and operational highlights for the second quarter and the first six months ended June 30, 2020.

We are extremely proud of our employees who worked tirelessly since the beginning of the year to deliver these excellent results despite the COVID-19 pandemic. Progress was made on all fronts from production operations with the largest volumes produced in Ceapros history to Research Engineering where the PGX group has successfully developed and optimized new products like yeast beta glucan as a potential inhalable therapeutic for COVID-19. As we continue to move forward and navigate operations during these unprecedented times, our focus remains on the health and safety of our associates, followed by business continuity, stated Gilles Gagnon, M.Sc., MBA, President and CEO.

Corporate and Operational Highlights

Pipeline Development:

-- Announced expansion of collaborative research program with McMaster University to develop inhalable therapeutic for COVID-19; -- Announced publication of positive results for a PGX-processed drug delivery system for accelerated burn wound healing; -- Pursued the development of new PGX-dried chemical complexes for potential applications under various forms like pills, capsules, fast dissolving strips and face masks; and -- Continued the monitoring of stability studies for liquid beta glucan and avenanthramides produced at the new manufacturing site as well as for the pharmaceutical grade dry powder formulation of avenanthramides.

Technology:

-- Made significant technical upgrades of PGX demo plant; -- Completed technical assessment of available pieces of equipment world-wide for final decision on the type and location of future commercial scale PGX unit; and -- Executed on research collaboration projects with University of Alberta and McMaster University for the impregnation of various bio actives using PGX-processed dry beta glucan and alginate as potential delivery systems for multiple applications in healthcare.

Production Operations:

-- Delivered the largest quantity of final product in Ceapros history; and -- Initiated decommissioning of Leduc manufacturing site.

Corporate:

-- Advanced conversations with interested potential partners to utilize Ceapros innovative technologies; and -- Pursued out-licensing discussions for PGX-processed new chemical complexes.

Subsequent to Quarter:

-- Announced publication of positive results from study evaluating avenanthramides in exercise-induced inflammation; and -- Announced successful development of yeast beta glucan as a potential inhalable therapeutic for COVID-19 and other fibrotic end-point diseases of the lung.

Financial Highlights for the Second Quarter and the Six Month Period Ended June 30, 2020

-- Total sales of $4,666,000 for the second quarter of 2020 and $8,939,000 for the first six months of 2020 compared to $3,054,000 and $6,251,000 for the comparative periods in 2019. The 43% increase in sales for the first six months is mainly due to a significant increase in sales of avenanthramides as well as an increase in sales of beta glucan to China, compared to the same period in 2019. -- Net profit of $1,077,000 for the second quarter of 2020 and $2,203,000 for the first six months of 2020 compared to a net loss of $559,000 and $1,195,000 for the comparative periods in 2019. -- Excluding non-cash items, mainly amortization, adjusted net profit for the first six months in 2020 is $ 3,323,000 versus adjusted net loss of $24,600 for the first six months of 2019. -- Cash flows generated from operations of $2,727,000 in 2020 vs $853,000 in 2019. -- Positive working capital balance of $7,732,000 as of June 30, 2020. -- Subsequent to quarter, made final payment clearing loan with Alberta Financial Service Corporation.

"Over the course of the second quarter, our operations executed and adapted well, delivering significantly improved results on both a sequential and year-over-year basis. This strong performance resulted in a record quarter for the Company, highlighting the resiliency of our business model focused on providing customers with essential, sustainable high-quality products. The ability of our business to successfully navigate through the challenging second quarter business environment is a testament to the commitment and hard work of our dedicated employees, and a measurable indication of the operational improvements and cost reduction initiatives being generated by our strategic investments of the past few years, continued Mr. Gagnon.

Looking ahead, while taking into account the ongoing potential economic impact related to COVID-19 and evolving consumption trends, we believe Ceapro is well-positioned to once again deliver a solid double-digit growth in sales over 2019. With a strong balance sheet, a group of dedicated people, and a solid base business coupled with the innovative technologies and products that we have developed to enable us to expand, Ceapro is poised to emerge as a successful Life Science company, concluded Mr. Gagnon.

CEAPRO INC. Consolidated Balance Sheets Unaudited June 30, December 31, 2020 2019 $ $ ASSETS Current Assets Cash and cash equivalents 4,267,320 1,857,195Trade receivables 3,058,551 3,659,541Other receivables 90,411 46,812Inventories (note 3) 1,261,494 669,005Prepaid expenses and deposits 262,199 178,908 8,939,975 6,411,461Non-Current Assets Investment tax credits receivable 607,700 607,700Deposits 85,755 85,755Licences (note 4) 19,995 21,477Property and equipment (note 5) 18,883,313 19,764,122Deferred tax assets 378,643 378,643 19,975,406 20,857,697 TOTAL ASSETS 28,915,381 27,269,158 LIABILITIES AND EQUITY Current Liabilities Accounts payable and accrued liabilities 843,004 1,291,204Current portion of long-term debt (note 6) 15,466 111,865Current portion of lease liabilities (note 7) 272,145 265,123Current portion of CAAP loan (note 9) 77,858 72,942 1,208,473 1,741,134Non-Current Liabilities Long-term lease liabilities (note 7) 2,637,776 2,775,627CAAP loan (note 9) 67,074 61,580Deferred tax liabilities 378,643 378,643 3,083,493 3,215,850 TOTAL LIABILITIES 4,291,966 4,956,984 Equity Share capital (note 8 (b)) 16,503,089 16,401,677Contributed surplus (note 8 (e)) 4,656,825 4,650,090Retained earnings 3,463,501 1,260,407 24,623,415 22,312,174 TOTAL LIABILITIES AND EQUITY 28,915,381 27,269,158

CEAPRO INC. Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)Unaudited Quarters Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 $ $ $ $ Revenue (note 15) 4,665,971 3,053,727 8,939,345 6,250,657Cost of goods sold 2,079,270 1,592,293 3,980,493 3,432,591 Gross margin 2,586,701 1,461,434 4,958,852 2,818,066 Research and product 399,797 811,894 902,339 development 1,612,398General and administration 838,263 878,620 1,703,297 1,611,639Sales and marketing 29,207 95,102 77,435 202,780 Finance costs (note 12) 44,583 52,813 146,192 161,187 Income (loss) from ) )operations 1,274,851 (376,995 2,129,589 (769,938 Other income (expenses) ) ) 73,505 )(note 11) (197,812 (181,596 (425,281 Income (loss) before tax ) ) 1,077,039 (558,591 2,203,094 (1,195,219 Income taxes - - - - Total comprehensive income ) )(loss) for the period 1,077,039 (558,591 2,203,094 (1,195,219 Net income (loss) per common share (note 18):Basic 0.01 (0.01 ) 0.03 (0.02 )Diluted 0.01 (0.01 ) 0.03 (0.02 ) Weighted average number ofcommon shares outstanding (note 18):Basic 77,608,341 77,053,836 77,573,327 77,050,330Diluted 77,980,876 77,053,836 77,930,529 77,050,330

CEAPRO INC. Consolidated Statements of Cash Flows Unaudited 2020 2019 Six Months Ended June 30, $ $ OPERATING ACTIVITIES Net income (loss) for the period 2,203,094 (1,195,219 )Adjustments for items not involving cash Finance costs 79,674 88,546 Transaction costs 1,108 3,080 Depreciation and amortization 920,521 912,751 Foreign exchange gain on long-term debt - (307 )Accretion 10,410 14,561 Share-based payments 108,147 152,017 Net income (loss) for the period adjusted for 3,322,954 (24,571 )non-cash itemsCHANGES IN NON-CASH WORKING CAPITAL ITEMS Trade receivables 600,990 795,136 Other receivables (43,599 ) 24,248 Inventories (592,489 ) (192,553 )Prepaid expenses and deposits (33,088 ) 219,940 Accounts payable and accrued liabilities relating to (448,200 ) 119,050 operating activitiesTotal changes in non-cash working capital items (516,386 ) 965,821 Net income (loss) for the period adjusted for 2,806,568 941,250 non-cash and working capital itemsInterest paid (79,674 ) (88,546 )CASH GENERATED FROM OPERATIONS 2,726,894 852,704 INVESTING ACTIVITIES Purchase of property and equipment (38,230 ) (27,611 )Deposits relating to investment in equipment (50,203 ) (53,239 )Accounts payable and accrued liabilities relating to - (1,458 )investing activitiesCASH USED IN INVESTING ACTIVITIES (88,433 ) (82,308 )FINANCING ACTIVITIES Stock options exercised - 13,783 Repayment of long-term debt (97,507 ) (241,044 )Repayment of lease liabilities (130,829 ) (138,541 )CASH USED IN FINANCING ACTIVITIES (228,336 ) (365,802 )Increase in cash and cash equivalents 2,410,125 404,594 Cash and cash equivalents at beginning of the period 1,857,195 1,844,134 Cash and cash equivalents at end of the period 4,267,320 2,248,728

The complete financial statements are available for review on SEDAR at https://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00010110 and on the Companys website at www.ceapro.com.

About Ceapro Inc.

Ceapro Inc. is a Canadian biotechnology company involved in the development of proprietary extraction technology and the application of this technology to the production of extracts and active ingredients from oats and other renewable plant resources. Ceapro adds further value to its extracts by supporting their use in cosmeceutical, nutraceutical, and therapeutics products for humans and animals. The Company has a broad range of expertise in natural product chemistry, microbiology, biochemistry, immunology and process engineering. These skills merge in the fields of active ingredients, biopharmaceuticals and drug-delivery solutions. For more information on Ceapro, please visit the Companys website at www.ceapro.com.

For more information contact:

Jenene ThomasJTC Team, LLCInvestor Relations and Corporate Communications AdvisorT (US): +1 (833) 475-8247E: czo@jtcir.com

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